Why Is There A Historic Amount Of Layoffs Hitting The Gaming Industry?

Layoffs are hitting everywhere recently – and the gaming industry is no exception. Here’s how they are affecting big studios and what it could mean for gamers worldwide.

2024 Layoffs Continue to Impact the Industry

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The video game industry has been dealt a tough hand in 2024. Last year the industry saw just over 10,000 layoffs across multiple companies. 

Multiple Roles Affected by Job Cuts

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Programmers, quality assurance workers, sound designers, artists, and many other workers found themselves without a job. 

Hopes for a Temporary Setback Dashed

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People were hopeful that it was just a blip in the sector – which raked in billions last year – but new figures from 2024 seem to indicate something else going on. 

A New Norm?

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It’s June 2024 now, and so far over 10,000 game industry workers have already been laid off – meaning last year’s blip wasn’t so much a blip as a new standard.

New Layoff Figures in 2024 Paint a Grim Picture

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2024 started badly and has gotten worse for game industry employees. Days into January 2024, over 500 employees at streaming giant Twitch and over 1800 employees from game engine maker Unity were laid off. And as the months have rolled by, those numbers have only risen.

Some Companies Hiring Amidst Industry Downsizing

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While companies like Nintendo continue to hire, the overall industry trend is worrying many. The cyclical nature of hiring and layoffs in the video game industry – where companies ramp up staffing during production and trim down post-launch – has reached a new extreme. 

Record-Breaking Revenue Despite Layoffs

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It’s a confusing time for many, especially as the industry is performing so well overall. Market analyst Newzoo predicted that the global video game industry would generate $184 billion in 2023 – a recovery following a slight dip in 2022. 

Market Predictions

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Full financial figures have yet to be released, but the gaming market does look strong, and with some big releases scheduled for this year, revenues could hit new heights.

Take-Two’s Staff Reduction 

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Individual company performances vary compared to the industry as a whole. Take-Two Interactive: Recently laid off 5% of its staff weeks after spending $460 million acquiring Gearbox. How this will impact their net revenue won’t be known for a long while, but experts claim the company hasn’t been profitable for a while despite its huge portfolio.

EA’s Revenue Increase Amid Layoffs

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Electronic Arts: EA reported a 2% increase in net revenue shortly after laying off 670 employees as part of a strategic “refocusing.”

Profits Rise Despite Mass Layoffs

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Sega: While Sega’s profits rose, primarily due to its pachinko business, the company still laid off hundreds and divested from studio Relic Entertainment – the studio behind Age of Empires 4.

Microsoft’s Studio Closures and Absorptions

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Microsoft has worked hard to muddy the waters around layoffs and profits. This year, the tech giant closed three studios and absorbed a fourth, including Tango Gameworks, which had just released a hugely successful indie title in 2023. 

Controversial Statements by Xbox Game Studios Head

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Xbox Game Studios head Matt Booty was later quoted talking about the need for “smaller games that give prestige and awards,” which caused a huge outcry by gamers who questioned why they’d shut down multiple successful studios that were producing exactly those sorts of titles.

Impact on Game Releases and Project Delays

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Several projects have been canceled or delayed due to these layoffs. So far, 2024 seems to be the year of the indie game, as layoffs at AAA studios have caused multiple delays for blockbuster games. This has resulted in a grand total of zero AAA games being released so far this year.

Delays of Major Titles to 2025

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Major titles are getting pushed back to 2025, which is further complicating the issue as these big companies are working within strict budgets and with large teams. Experts are worried that this will just push more companies into awkward positions where they’re forced to lay off productive members of staff.

Economic Factors Behind the Layoffs

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But why exactly are these layoffs hitting the industry? It’s a combination of many things. Post-pandemic economic adjustments have seen companies that expanded rapidly to meet demand now realizing they overhired. 

Rising Costs and Financial Struggles

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The cost of borrowing money has risen due to inflation and higher interest rates, making it difficult for companies to secure funding.

The Rise of Free To Play Games

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Players are also spending less on games despite gaming as much as ever. A lot of this can be pinned on free-to-play games like Roblox and Fortnite, which continuously update, and place a big focus on user-generated content.

Long-Term Impacts on the Industry and Workforce

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The drive to cut costs and improve a company’s finances often leads to layoffs and studio closures – always with a high human cost. The loss of experienced employees and the cancellation of potentially groundbreaking games are just part of the fallout. 

Loss of Industry Experience and Expertise

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Many skilled workers leave the industry altogether, taking their years of knowledge and expertise with them. The long-term impacts of these layoffs and closures will likely rebound through 2025 and beyond.

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The post Why Is There A Historic Amount Of Layoffs Hitting The Gaming Industry? first appeared on Liberty & Wealth.

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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.

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